In a statement the regulator says: "Finansinspektionen rules that the press release that Borse Dubai made public on 9 August 2007 was a public takeover bid as defined in the Act on Takeovers in the Stock Market."

The statement continues: "When Borse Dubai made the press release public it had not undertaken to follow the rules that Nordic Exchange Stockholm has stipulated for such offers. As a result, FI notes that Borse Dubai has breached the law."

However, Finansinspektionen says that it will take no further action against Borse Dubai because the Middle East exchange has subsequently complied with the Act.

The exchange undertook to follow the rules of the Nordic Exchange Stockholm on August 16 before making an unsolicited $4 billion bid for OMX the following day - trumping Nasdaq's $3.7 billion offer.

The ruling - which Borse Dubai says it acknowledges - means the exchange can now continue with the planned takeover.

However, a recent report from Rosenblatt Securities raised doubts about Borse Dubai's takeover chances even before today's decision by the regulator.

The report says: "As the FSA must ultimately approve any deal and since the exchange is considered a strategic industry, its tone thus far does not bode well for Borse Dubai being approved as a fit and proper owner of the OMX."

Subsequent to the FSA's ruling, the Swedish government, which owns 6.6% of OMX, says it will also look into whether it is able to sell its stake to Borse Dubai, or whether it will sell to an alternative bidder.